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Coloplast delivers solid full-year result and 8% growth for the sixth quarter running
Coloplast delivered 8% organic revenue growth in the fourth quarter of the 2017/18 financial year and 8% full-year organic revenue growth as well as a 31% EBIT margin. The company is guiding for ~8% organic revenue growth in 2018/19.
Coloplast delivered 8% organic revenue growth in the fourth quarter of its financial year, with reported revenue in DKK up by 6% to DKK 4,234m. Full-year organic revenue growth was also at 8%, while reported revenue in DKK was up by 6% to DKK 16,449m. While lifted by acquisitions, revenue growth measured in DKK was adversely affected by 4% due to currency developments, especially USD and ARS depreciating against DKK.
Relative to the 7% organic growth rates of the past three years, the full-year revenue growth marks a shift in momentum and an acceleration of growth in a market otherwise growing by 4-5%. Accelerating growth was indeed Coloplast’s goal when revising its long-term guidance in November 2017 with the ambition of increasing investments and accelerating growth during the period to 2019/2020 and growing at the upper end of the 7-9% range.
Full-year EBIT amounted to DKK 5,091m, a 1% increase in DKK, for an EBIT margin of 31%, compared to 32% in 2016/17. When measured at constant exchange rates and adjusted for the DKK 90m one-off revenue adjustment related to Veterans Affairs, EBIT was up by 4%, for an EBIT margin of 31% against 33% last year. The EBIT performance is in line with the company guidance and reflects an increase in innovation, sales, and marketing investments across all product categories.
- “We’re delivering a strong fourth quarter performance at 8% revenue growth for the sixth quarter running, and we’re delivering highly satisfactory full-year results with growth across all regions. Even though 2017/18 was a year of investing for Coloplast, we’re still delivering solid results and we continue to grow at double the market rate. Obviously, I’m quite pleased with that,” said Coloplast CEO Lars Rasmussen.
The business areas produced the following full-year organic growth rates: Ostomy Care 9%, Continence Care 8%, Interventional Urology 10% and Wound & Skin Care 3%. A comprehensive pricing reform in Greece adversely affected the full-year growth performance in the Wound Care business.
Looking at sales by geographies, the European markets contributed 5% growth to FY sales, Other developed markets, driven mainly by the USA, delivered 11% revenue growth, while Emerging Markets provided a 14% increase.
- “We’re seeing solid growth across our business areas, driven not least by our product launches and commercial investments. We will continue to invest up to 2% of revenue in innovation, sales, and marketing in 2018/19, so we can continue to develop and provide innovative products such as SenSura® Mio Concave. This new product portfolio has been very well received, and it is now available and eligible for reimbursement in ten countries. 2018/19 will be another year of investing, and in the first quarter we are launching SenSura® Mio Baby and SenSura® Mio Kids, designed specifically for premature babies and children up to 4 years,” said Mr Rasmussen.
Through the SenSura® Mio Baby and SenSura® Mio Kids portfolios, Coloplast sets a new standard for paediatric ostomy care products. The two new categories are scheduled for launch in all core markets within the next 12 months.
Financial guidance 2018/19
Coloplast is guiding for ~8% organic revenue growth at constant exchange rates. Reported growth in DKK forecast at 8-9%. EBIT margin of 30-31% expected at constant exchange rates with a reported EBIT margin of ~31% in DKK. The EBIT margin forecast reflects additional investments of up to 2% of revenue for innovation and sales and marketing purposes.
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Financial highlights and key ratios
|DKKm||2017/18|| 2016/17||Change|| 2017/18|
|EBIT margin (at constant exchange rates)||31%|| 33%|
(adjusted for VA)
|EBIT margin (in DKK)||31%||32%||33%||33%|
|Profit for the period||3,845||3,797||1%||1,039||1,010||3%|
Sales performance by business area
|DKKm|| 2017/2018||2016/2017||Organic growth||Reported growth|
|Wound & Skin Care||2,140||2,143||3%||0%|
|Organic growth||Reported growth|
|Wound & Skin Care||582||569||4%||2%|
Financial guidance for 2017/18
|Guidance for 2018/19||Guidance for 2018/19 (DKK)|
|Sales growth||~8% (organic)||8-9%|
|EBIT margin||30-31% (at constant exchange rates)||~31%|